CHAPTER 1 INTRODUCTION

Transcription

1 CHAPTER 1 INTRODUCTION 1.1 Background The retail market conditions in Indonesia are currently facing a high level of competitions due to factors such as new competitor entrants, high opportunities and low level of barriers. Opportunities in Indonesia have been increasing due to the country s development, it can be said that now Indonesia has become one of the developing country that has a high prospect for investment. Local retail businesses are not only competing with local companies but also competing with foreign companies. Every business needs to survive in order to keep their existence in the market. Excellent management, well-planned organization and strong internal control are important factors in order to become a strong and successful company. Internal control is a crucial factor for a company s survival. It is really necessary to have a strong internal control, as without internal control it will results loss to the company. Nowadays, many retail companies are failed to survive due to the lack of internal control, because many companies are only concern about their sales without having a special attention to the internal control of the company. Having a strong internal control in every business procedure will improve the management quality and results in better company s performance in the future. 1

2 2 PT. Matahari Department Store is one of the biggest retail companies in Indonesian retail market. The Matahari Group is the leading Indonesia s multi format modern retailer with core retail businesses in fashion and groceries. PT. Matahari Department Store provide services focusing on fashion and food needs through its own nationwide stores in three business formats such as Matahari department stores, hypermart, and foodmart.based on the performance, it shows that PT. Matahari Department Store has grown rapidly from time to time, and this can be said as one of the competitive advantage which other Indonesian retail companies may not have the same opportunity to expand their market to overseas. PT. Matahari Department Store has successfully become a pioneer in retail business from time to time and managing its businesses locally and internationally. However, PT. Matahari Department store has potential problems that currently need to be addressed regarding the EDC machine (Electronic data capture machine) and dispute between store manager and the managements. Therefore, it is important to address the issues and finding the solutions, thus PT. Matahari Department Store will have better performance. The author believes that it is important to have a strong internal control even though the company has grown successfully. In this thesis, author is interested to analyze on PT. Matahari Department Store internal control and revenue cycle system and finally suggests on improvements that is needed for PT. Matahari Department Store to perform better in the future. Therefore, the author would like to produce a thesis titled The analysis of revenue cycle and internal control; Case study of PT. Matahari Department Store.

3 3 1.2 Scope of work Focusing on analysis of internal control and revenue cycle system of PT. Matahari Department Store, which are based from the theory of accounting information system. 1.3 Problem identification Strong internal control has become a necessity for a company in order to protect business operation from irregularities, prevention of fraud and better company management. Therefore, This thesis will concentrate on several topics, such as: 1. Current situation Revenue cycle system, focusing on cash sales & credit card system of PT. Matahari Department Store 2. Analysis on current and potential future problems of the system. 3. Strength and weaknesses of the internal control system 4. Recommendation to the new systems

4 4 1.4 Objectives and benefits Objectives: 1. Identification of problem exists in the company 2. To compare between the old revenue cycle systems and newly proposed system. 3. To explore more about the internal control applied in the company and suggesting on improvement of the internal control. 4. Finding solution and recommendation to problems faced in both internal control and revenue cycles of the company. Benefits: This thesis is expected to be beneficial for PT. Matahari Putra Prima, the author and also other readers. The benefits will be explain as follows: 1. PT. Matahari Department Store: Analysis on the current and future potential problems will help the company to improve its current system by providing guidance and recommendation in relate with the theory of accounting information system. PT. Matahari Putra Prima will have better understanding about good internal control and expected to perform better in the future. 2. AUTHOR: A great opportunity for the author to gain deeper knowledge and experience about accounting information system by understanding the company s internal control and

5 5 revenue cycle. The knowledge that gained from this research will be very useful for author s career in the future. 3. READERS: This thesis is expected to be a useful reading material for readers as to increase knowledge and understanding about real implementation of revenue cycle and internal control in the company. 1.5 Research Methodology 1. Field Research: Interview: The author will conducts structured interview by direct meeting with the accounting personnel and employees of PT. Matahari Putra Prima as to gather more information about revenue cycles and internal control procedures. Observation: Direct observation on the operation will be conducted in PT. Matahari Putra Prima office. By observing the operation processes, it will increase authors understanding about the real implementation of the system. 2. Literature review: Literature review will be collected based on Internet research, e- journals, books, and other materials that are relevant to the research topic.

6 6 1.6 Thesis Structure Chapter 1: Introduction The first chapter will be discussing about the background, scope of work, problem identification, objectives, research methodology, and the thesis structure. Chapter 2: Theoretical Foundation This chapter will cover all the relevant theories and framework regarding revenue cycle s internal control that will be used as the basic theory of the research. Chapter 3: Company Profile This chapter will discuss about the history of the company, background, organizational structure, business portfolio, as well as the development of company. Chapter 4: Findings and Discussions Findings of the research will be analyzed and discussed in this chapter. Problem identification about the revenue cycles and internal control procedures will also be covered. Chapter 5: Conclusion and Recommendation This chapter concludes the author s overall evaluation about company s revenue cycle system and internal control procedures. The author will provide Recommendation and conclusion for the company s improvement in the future. Limitation of the study will also be covered in this section.